Futurity in general is, in many ways, not all that innovative, but reflective of ongoing change. Just consider how different things will be in a mere 50 years – keeping in mind that the ballpoint pen only came to the U.S. market in 1945, the computer game Pong only entered the market in 1972, and electronic or email on personal computers only advanced in the late 1980s. Will we look as retro to our descendants as our ancestors appear to us today (if we bother to look)? Yet, at the same time we are only a brief constant in a world of change.
Distorting aspirations. As economic growth in emerging markets allows millions of people to enter the middle class, it brings great new opportunities for them to improve the quality of their lives. It also exposes them to the challenge of rising aspirations with limited income. New international consumers must learn how to manage their aspirations as they experience emotional marketing appeals for products and services that might not be considered practical or “good for them.”
In a chapter titled “Ethical Lapses of Marketers” in Jagdish Sheth and Rajendra Sisodia’s book, Does Marketing Need Reform? (M.E. Sharpe, 2006), good friend Philip Kotler posed two dimensions of “the marketing dilemma” for all marketing: (1) What if the customer wants something that is not good for him or her? (2) What if the product or service, while good for the customer, is not good for society or other groups? How consumers, marketers and societies manage that dilemma in international markets will need to be resolved on a country-by-country basis.
Coping with culture. All too often, cultures are insufficiently studied or wrongly interpreted. It might seem that responsiveness to cultural differences should be second nature to marketers and therefore virtually reflexive. However, cultural differences continue to challenge marketers and can negatively affect the marketplace. Many times, disregarding local idiosyncrasies is like the introduction of a destructive virus on a culture. For example, bringing snakes to Guam almost exterminated all birds there. Or, when selling construction wood to Japan, the importer of the boards needs to consider both the typical Japanese “tsubo” size, as well as the Japanese tendency to build smaller rooms. Not doing so supports the success of competitors and leaves Japanese purchasers dissatisfied.
Though there is frequent talk about how we understand each other so much better than in the past, the reality looks different. The actual overlap between societies is typically very miniscule. There may be a number of Chinese industry leaders who have been to the United States and have developed a clear understanding of America and Americans, but they represent a very small fraction of the Chinese populace. The average Chinese person may knowledgably understand as much about Columbus, Ohio, as the average Buckeye State resident knows about Tianjin. The consequence of that limitation is a danger of misunderstandings and susceptibility to hostility.
It is hard to understand the value of global trade and exports in particular. Exports can determine the level of imports that a country can sustain, affect currency values as well as the fiscal and monetary policies of countries, and shape public perception of a nation’s ability to compete. In 2008, the U.S. was importing 1.5 times as much as it was exporting, creating a trade deficit of $680 billion. Large trade deficits are not sustainable in the long run. They are a strong indicator that a country is consuming more than it is producing, which reduces independence by making it increasingly reliant on the products and services of other nations.
Increasing export volume helps reduce the trade deficit. This is a wise course of action for many reasons, but one of the most important is that exporting creates jobs. In fact, the International Trade Administration of the U.S. Department of Commerce reports that, in 2006, exports of manufactured goods supported 6 million U.S. jobs. Just as importantly for companies, however, is how exporting can help them achieve economies of scale. By broadening reach and serving customers abroad, it is possible to produce more and to do more efficiently in industries affected by economies of scale. This often leads to lower costs and higher profits both at home and abroad
This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.
Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg. 14 -15.